If You Lend Money at a Nominal Interest Rate of 9

question 30

Multiple Choice

If you lend money at a nominal interest rate of 9 percent and the inflation rate is 1 percent,what real interest rate will you earn?

• A) 3 percent
• B) 4 percent
• C) 8 percent
• D) 12 percent
• E) 15 percent

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Definitions:

Characteristic Thoughts

The habitual patterns or types of thinking that are typical of an individual's cognitive processes.

Habit

A repetitive behavior that an individual performs regularly, often without much conscious thought.

Pleasure Principle

In psychoanalytic theory, it is the driving force of the id that seeks immediate gratification of all desires, wants, and needs.

Guilt/Pride Principle

Refers to the internal motivators of guilt and pride that can encourage conformity to social norms and personal standards.